Latest Crimea Casualty: Miley Cyrus?

In a world as interconnected as ours, sanctions inevitably have unintended consequences. Witness the chain of events unfolding now in Helsinki, where Justin Timberlake, Nine Inch Nails, Aerosmith and Miley Cyrus have scheduled gigs for May and June. All these concerts may now be canceled or moved because the venue, Hartwall Areena, is owned by three Russians who are on the U.S. sanctions list.

Gennady Timchenko, the commodities trader who sells the oil of state-owned Rosneft and other Russian producers outside Russia, owns 50 percent of the multi-purpose arena, and the brothers Rotenberg -- Arkady and Boris -- friends of Russian President Vladimir Putin since his judo days, own 25 percent each. All three are dual Russian and Finnish citizens. They had nothing to do with the Russian annexation of Crimea, but they are said to be members of Putin's inner circle. Hence the sanctions.

No U.S. individuals or companies are allowed to do business with the blacklisted Russians. So Live Nation Entertainment, the Beverly Hills, California-based event organizer and ticket seller that booked the venue for Cyrus and Timberlake, cannot rent Hartwall Areena for the shows. The American artists themselves are in a dubious position: Their ticket sales are enriching people that the U.S. government deems out of bounds.

Timberlake's May 12 concert is already sold out. Live Nation is still selling tickets for the other shows as it tries to figure out how the sanctions affect it. For the U.S. company, Russia is a desirable market: It has looked for a local partner or an acquisition target since 2004 and finally managed to open a Moscow office, covering both Russia and Ukraine, last year. Live Nation can probably avoid working with the sanctioned individuals in the Russian capital or in St. Petersburg, where there are a variety of large concert venues. Helsinki, however, is a smaller city, and there is only one workable alternative to the Hartwall Areena -- the older Helsinki Ice Hall.

Hartwall Areena can sell 13,000 concert tickets, while the Ice Hall's capacity is just 8,200. Most major artists have played at the newer venue since it was built in 1997.

If the American artists' gigs are canceled, their Finnish fans who neither know nor care who owns the city's biggest indoor stadium will have to return tickets. Cyrus, Timberlake and rockers from Aerosmith and Nine Inch Nails, who might have heard of Timchenko and the Rotenbergs only by accident and who have not in any way condoned Russia's Crimean adventure, will suffer financial losses. So will Live Nation, which signed up with Hartwall Areena before the sanctions were announced.

Whether all this will move Putin to give the contested peninsula back to Ukraine is a rhetorical question. Instead, he might want to respond by singing a few lines of a Miley Cyrus song, "The Climb":

In a freshly-published paper on the effectiveness of targeted sanctions, Clara Portela of Singapore Management University takes a dim view of measures like those adopted by the U.S. Personal sanctions will have any effect at all only if their targets are painstakingly selected, she writes. Hitting Timchenko and the Rotenbergs may give the U.S. government the illusion of hitting Putin where it hurts, but they are, in the end, only businessmen who will eventually transfer the ownership of their assets to slip away from the sanctions. In the meantime, innocent bystanders like Miley Cyrus's Finnish fans, and Cyrus herself, will suffer from the peaceful equivalent of friendly fire. Will they be angry at Timchenko or at the U.S. government? My guess is the latter.

Besides, "sanctions are manifestly slow," Portela writes. "Since the measures imposed in the first round are mild, they only attain a meaningful degree of pressure after various rounds of tightening. This happens at best several years after their initiation, and once this level is reached, they need further time to take effect. In the meantime, many grow impatient with the stalemate, not least because it obstructs cooperation in areas of concern."

The U.S. and its European allies were unwilling to provide military aid to Ukraine when Russia invaded Crimea. They were also hesitant to introduce serious economic sanctions against Russia because no one, especially in Europe, was willing to accept the damage to their own economic interests. Messing around with "targeted" sanctions that result in the cancellation of Miley Cyrus gigs is a ridiculously unconvincing alternative. The only way to find some kind of solution to the Ukraine crisis is for the West and Russia to make a duet of another Cyrus hit, "Wrecking Ball":

I never meant to start a warI just wanted you to let me in.

To contact the writer of this article: Leonid Bershidsky at lbershidsky@bloomberg.net.

To contact the editor responsible for this article: Mark Whitehouse at mwhitehouse1@bloomberg.net.

Leonid Bershidsky is a Bloomberg View columnist. He is a Berlin-based writer, author of three novels and two nonfiction books.
Read more.